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Jig is up for GOP on oil-rig rules

The Republicans are running out of options in their attempt to stop implementation of the state’s new proposed rules and regulations for the growing oil and gas industry.

The rules gained initial approval by the full Senate Tuesday, despite strong objection by Republicans, and now await a third reading before heading to Gov. Bill Ritter’s desk to be signed into law.

The vote on Tuesday, like many in this year, split on a straight party line, with 21 in favor, 13 against and 1 excused.

At issue are nearly 100 new rules and regulations that mandate energy firms to meet various public health, environmental and wildlife-protection standards before drilling for oil and gas in Colorado. The state
began reviewing the rules in 2007, after lawmakers voted nearly unanimously to update the state’s regulations.

But the agreement stopped there.

Democrats and environmentalists say the new rules — which added new protections for wildlife and public safety — are especially needed considering that more than 8,000 oil and gas rig permits were issued in 2008 — up more than 100 percent since 2005. Furthermore, supporters say, the state is poised to see tens of thousands of new wells in coming decades.

But Republicans, backed by the oil and gas industry, including the Colorado Oil and Gas Association, say the new regulations will drive up the cost of energy production in Colorado, do further harm to the state’s sputtering economy and keep energy companies from bringing jobs to the state.

Republicans have consistently pointed to a 51 percent reduction in the number of oil and natural gas rigs in Colorado since last summer as proof of the disastrous effects the threat of the rule implementation is having on the energy industry.

“This will have a deleterious effect on the economy of Colorado (and) the people of Colorado,” said Sen. Kevin Lundberg, R-Berthoud. “Even with the prospect of these rules going into effect, we have seen a deterioration of the rig count that we have not seen in other states.... It is not business as usual.

“This bill means no business, and it means we are shutting down business. It means the oil and gas industry is heading out of the state,” he warned.

But Democrats disagree, saying the loss of rigs in Colorado has everything to do with the decline in the price of natural gas and oil and nothing to do with new rules and regulations that haven’t yet gone into effect.

“The percentage change in the number of rig counts between August of 2008 and (March) of 2009 that Colorado has seen is a 51 percent decline,” said Sen. Jennifer Veiga, D-Denver. “That is in contrast to our neighbors. New Mexico has seen a 58 percent decline, and Texas has seen a 55 percent decline. There is clearly no question that the rigs are down because the oil and gas price is down. Colorado is no different, and we share in that problem, as does Texas, as does Utah and others.”

Some Republicans, including Senate Minority Leader Josh Penry, were willing to acknowledge that commodity prices have had an impact on rig counts in Colorado and around the nation, but said the new regulations, if passed, would throw fuel onto a fire that is already melting the state’s economy.

“This administration argues that the (new) rules will have no bearing in the decision of (the) natural gas and oil (industry) to invest in Colorado, and to an extent, that is true,” Penry said before calling oil and gas a “second-class citizen” in Colorado. “But it is clear that Governor Ritter’s rules will make a bad situation worse. They will kill jobs and reduce energy production in this state.”

Republicans attempted to pass only one amendment to the bill, marking what they said was a genuine effort to compromise with Democrats. The amendment, moved by Penry, would have left 90 percent of the rules in place but would triple the proposed fines for noise and odor violations and increase buffer zones to protect water. It also would repeal a rule that gives the Department of Health and Environment and the Division of Wildlife the authority to appeal permitting decisions made by the Oil and Gas Commission.

“Let’s repeal this additional appeals process that will slow down (the process for application) for energy production in Colorado,” Penry said.

Penry’s amendment also would have put wildlife considerations in the hands of the land and mineral owners and would stop the Division of Wildlife from coming in and “telling private property owners what can be done” on their land, but would still allow the department to have input.

Democrats, led by Veiga, voted the amendment down on a party-line split, saying that, although it left 90 percent of the rules and regulations in place, the 10 percent that were repealed or changed would, in effect, rewrite key provisions of the new regulations.

So what is left for Republicans to do?

Not much.

If, at some point, they regain control of the Legislature, they could pass legislation to start the process of drafting new rules and ensure the new ones are more palatable. But, considering this latest round of rule rewriting has taken more than two years, it wouldn’t be a fast track to change.

And that would explain the GOP’s frustration.

“It feels like we are having too many party-line votes this year on important issues,” Sen. Greg Brophy, R-Wray, said during Tuesday’s debate.